Climate change – heat waves, water shortages, and reduced flexibility – poses huge risks for electric utility infrastructure.
The Capture-Committed Power Plant
Moving coal forward requires a clear path to CCS.
The result of this skepticism is that proposed capture-ready coal plants face much the same opposition as other coal plants and many proposals for such plants have been abandoned. Given today’s concerns about climate change, claims that plants are capture ready might not be enough for many proposed plants to survive the permitting and regulatory process. In most cases, something more specific and certain is needed. Capture-committed power plants can fill that need by providing the additional assurance that regulators want.
A capture-committed power plant would be a new power plant that adequately has been demonstrated to be technically capable of, and financially committed to, implementing CCS at a specified later date. In order for proposed power plants to be considered capture committed, plant developers would be required to meet five criteria:
• Make a substantial but affordable financial commitment to CCS from an early date;
• Make a binding, legal commitment to implement capture by a date certain;
• Demonstrate a clear technical path for each of the components of CCS;
• Acquire all the necessary permits and rights to implement CCS; and
• In states with integrated-resource planning, show how any reductions in net generation capacity or energy due to CCS would be made up for.
Meeting these criteria can provide confidence that CCS can and will be put into operation. Making the concept of capture-committed power plants a reality will require actions by state regulators and perhaps legislation at both the state and federal level, including mitigating some of the risks taken by the plant owner.
Capture-committed plants also would expedite the development of CCS because they would facilitate the development of designs, planning techniques and regulations for CCS. Such plants would be ideal platforms for future pilot and demonstration plants.
CCS Trust Fund
Assurance of CCS implementation requires a financially significant commitment by the plant developer. One way to obtain such a commitment would be for the plant developer to make a series of ongoing payments into a capture investment trust fund (CITF). (To the extent that legislation imposes costs on CO 2 emissions prior to the capture date—for example, the need to purchase CO 2 emissions allowances—the plant owner also would have to pay those costs.) The proceeds from the CITF only could be used by the plant developer for investments in CCS at the plant. The CITF would have an independent trustee and its governance would be subject to public regulation. Like any trust fund, the funds would be managed by a fiduciary third party, typically a commercial bank. The CITF would create a strong financial incentive to implement CCS because these monies would be forfeited if they were not invested as promised in CCS.
The plant owner would be required to make periodic (perhaps annual) payments into the CITF starting at an early date—final approval of the plant, the start of construction, or the start of plant operation without CCS. Payments into the CITF would be set such that, given the expected return on CITF investments, the money available would be adequate to fund a